Some financials as reported in CEDAR:
RESULTS OF OPERATIONS
Six months ended April 30, 2019 and 2018
For the six months ended April 30, 2019, the Company’s business operated primarily through two operating segments – consulting business, and cultivation and sale of medical cannabis. The Company reports activities not directly attributable to an operating segment under corporate. These operating segments are monitored by the Company’s chief operating decision makers, and strategic decisions are made on the basis of segment operating results.
Revenue Gross profit Net loss before
income tax
$ 634,775 $ $ 693,386 $
$ (407,773) $
318,495 $ (59,371) $
(2,198,287) $
Consulting Medical cannabis
Corporate
- $
- $
(3,793,251) $
Total 953,270
634,015
(6,399,311)
We incurred a net and comprehensive loss of $6,399,311 for the period ended April 30, 2019 (2018 - $4,456,586). The $953,270 in revenue (2018 - $611,395) was as a result of the operations purchased as part of the acquisition made in Q4 2017 and Q2 2018.
During the six months ended April 30, 2019, the Company sold 5,765 plants (2018 - Nil) resulting in revenue of $172,950 (2018 - $Nil).
Cost of Sales
Plants that are in pre-harvest are considered biological assets and are capitalized on the balance sheet at fair market value less cost to sell at their point of harvest. Fair market value estimates are based on the Company’s selling list prices for specific cannabis plant strains. Costs to sell include post-harvest, trimming, fulfilment, testing and shipping costs. The Company capitalizes all the direct and indirect costs as incurred related to the biological transformation of the biological assets between the point of initial recognition and the point of harvest including labour related costs, grow consumables, materials, utilities, facilities costs, and quality and testing costs. As they continue to grow through the pre-harvest stages, a corresponding non-cash unrealized gain is recognized in income, reflecting the changes in fair value of the biological assets. At harvest, the biological assets are transferred to inventory at their fair value, which becomes the deemed cost for inventory. Inventory is later expensed to cost of sales when sold.
The cost of sales of ($58,611) (2018 - $397,001) during the period ended April 30, 2019 was comprised of inventory production costs expensed of $76,149 offset by reversals of previously recorded cost of $134,760.
During the period ended April 30, 2019, the Company recorded cost of sales including realized portion of change on inventory sold of $140,305 (2018 - $Nil).
During the period ended April 30, 2019, the Company recorded unrealized loss on changes in the fair value of biological assets of $237,561 (2018 - $Nil).
Some of the items comprising the loss for the six months ended April 30, 2019 were:
? Advertising and promotion of $197,863 (2018 - $544,794) decreased primarily as a result of decreased activities in the current period to raise awareness regarding the Company’s activities.
? Depreciation and amortization of $1,251,872 (2018 - $5,205) increased primarily as a result of an increase in additions to plant and equipment and intangible assets subsequent to the acquisition made in Q4 2017 and Q2 2018.
? Filing fees of $23,128 (2018 - $33,721) decreased due to decreased share activities during the current period.
? Interest and accretion of $1,545,369 (2018 - $465,472) increased primarily due to interest accrued on the convertible debentures and loans payable during the current period.
? Management and consulting fees of $372,800 (2018 - $1,491,295) decreased primarily due to a decrease in consulting fees during the current period.
? Office expenses of $556,979 (2018 - $164,910) increased as a result of increased expenses required to run the Company acquisitions made in Q4 2017 and Q2 2018.
? Rent of $457,867 (2018 - $299,401) increased due to rentals and leases assumed during the acquisitions made in Q4 2017 and Q2 2018.
? Share-based compensation of $1,080,089 (2018 - $1,363,286) decreased as a result of stock options granted during the period.
? Travel of $141,532 (2018 - $119,433) increased primarily as a result of more trips taken during the current period relating to new operations.
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? Transfer agent fees of $12,123 (2018 - $17,304) decreased due to decreased share activities during the current period.
? Wages of $932,584 (2018 - $379,764) increased due to new operations in the current period.
Three months ended April 30, 2019 and 2018
For the period ended April 30, 2019, the Company’s business operated primarily through two operating segments – consulting business, and cultivation and sale of medical cannabis. The Company reports activities not directly attributable to an operating segment under corporate. These operating segments are monitored by the Company’s chief operating decision makers, and strategic decisions are made on the basis of segment operating results.
Consulting Medical cannabis
Corporate
- $
- $ (1,611,033) $
Total 653,240
(131,187) (3,797,158)
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Revenue Gross profit Net loss before
income tax
$ 436,745 $ $ 413,064 $
$ (159,150) $
216,495 $ (544,251) $
(2,026,975) $
We incurred a net and comprehensive loss of $3,797,158 for the period ended April 30, 2019 (2018 - $3,436,044). The $653,240 in revenue (2018 - $614,360) was as a result of the operations purchased as part of the acquisition made in Q4 2017 and Q2 2018.
During the period ended April 30, 2019, the Company sold 2,365 plants (2018 - Nil) resulting in revenue of $70,950 (2018 - $Nil).
Cost of Sales
The cost of sales of $23,681 (2018 - $85,190) during the period ended April 30, 2019 was comprised of inventory production costs.
During the period ended April 30, 2019, the Company recorded cost of sales including realized portion of change on inventory sold of $140,305 (2018 - $Nil).
During the period ended April 30, 2019, the Company recorded unrealized loss on changes in the fair value of biological assets of $620,441 (2018 - $Nil).
Some of the items comprising the loss for the three months ended April 30, 2019 were:
? Advertising and promotion of $80,579 (2018 - $532,147) decreased primarily as a result of decreased activities in the current period to raise awareness regarding the Company’s activities.
? Depreciation and amortization of $480,940 (2018 - $3,958) increased primarily as a result of an increase in additions to plant and equipment and intangible assets subsequent to the acquisition made in Q4 2017 and Q2 2018.
? Filing fees of $17,782 (2018 - $31,028) decreased due to decreased share activities during the current period.
? Interest and accretion of $768,612 (2018 - $459,413) increased primarily due to interest accrued on the convertible debentures and loans payable during the current period.
? Management and consulting fees of $187,800 (2018 - $1,384,920) decreased primarily due to a decrease in consulting fees during the current period.
? Office expenses of $327,762 (2018 - $114,807) increased as a result of increased expenses required to run the Company subsequent to the acquisitions made in Q4 2017 and Q2 2018.
? Rent of $195,633 (2018 - $164,361) increased due to rentals and leases assumed during the acquisitions made in Q4 2017 and Q2 2018.
? Research and development $80,000 (2018 - $40,000) increased due to the timing of expenses recorded by the Company in the current period.
? Share-based compensation of $183,940 (2018 - $661,021) decreased as a result of stock options granted during the period.
? Travel of $72,209 (2018 - $68,204) increased primarily as a result of more trips taken during the current period relating to new operations.
? Transfer agent fees of $3,113 (2018 - $15,176) decreased due to decreased share activities during the current period.
? Wages of $443,548 (2018 - $227,804) increased due to new operations in the current period. LIQUIDITY AND CAPITAL RESOURCES
During the period from November 1, 2018 to June 28, 2019, the Company:
i) issued 1,014,000 shares pursuant to the exercise of options for proceeds of $659,100.
ii) completed a non-brokered private placement of units. In connection with completion of the non-brokered private placement, the Company issued 3,523,832 units at a price of $0.60 per unit for aggregate gross proceeds of $2,114,299.
Each unit consists of one common share of the Company, and one half of one share purchase warrant. Each warrant is exercisable to acquire an additional common share of the Company at a price of $0.08 per share for a period of 24 months. The Company also paid a finder’s fee to qualified finders in respect to the financing.
The Company also paid finders’ fees of $52,014 and issued 82,730 finder’s warrants (valued at $32,700). Each warrant entitles the holder to acquire a common share of the Company at a price per common share of $0.80 for a period of 24 months from the date of issuance.
iii) completed a non-brokered private placement of units. In connection with completion of the non-brokered private placement, the Company issued 166,000 units at a price of $0.60 per unit for aggregate gross proceeds of $99,600.
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As of April 30, 2019, the Company had a cash position of $1,303,773, compared to $362,810 as at October 31, 2018, representing an increase of $940,963. As of April 30, 2019, the Company had a working capital deficiency of $3,072,462 compared to a working capital of $280,728 as at October 31, 2018.
Inventory at April 30, 2019 increased to $138,160 (October 31, 2018 - $Nil) and biological assets increased to $168,296 (October 31, 2018 - $78,244).
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They sold over 5,000 plants with only revenue of approximately $172,000. I believe that maybe due to having prepaid upfront by Wyland group of $2,000,000.00
